5 ways to waste money with PPC advertising

Pay-per-click advertising is the biggest lead generation breakthrough in a long time. Thanks to its ability to narrowly target prospects, tightly manage spending and precisely measure results, PPC is one of the most efficient lead generation tools ever developed, especially for small and midsize companies.

But it has a downside. Because PPC campaigns are so quick to set up and so easy to start, a business owner easily can waste thousands of dollars in a matter of weeks before learning hard (and expensive) lessons about what works and what doesn't. Here are the most common mistakes made with PPC:

Using your home page as the landing page. When you set up a PPC ad, whether with Google, Yahoo or any other search engine, it's up to you to decide where to direct the people who click on your ad. By default, most firms send clickers to the company home page. After all, they reason, if the home page is the digital equivalent of the front door, shouldn't prospects come here as a starting point?

No, and here's why: Most company home pages cover too many subjects and have too much going on to serve as effective landing pages. Simply dropping a searcher here in the hope that he finds what he's looking for almost guarantees frustration and failure. Remember, a person who initiates a Web search is looking for something specific. Tossing him to a generic home page (with the implicit message, "Here, you figure it out") works against converting ad clicks into leads.

Effective PPC ads take clickers to a tightly focused landing page developed and matched specifically to the subject of the search. The page has minimal distractions, a strong call to action and a thought-out process for moving the searcher to the next step, whether that's requesting information, signing up for a newsletter or making a purchase.

Fix No. 1: Take clickers to a well-crafted landing page, distinct from the company home page.

Not bidding enough to secure a top spot. PPC works on an auction model, giving you, the advertiser, the option of deciding how much you want to pay for a search term. In effect, you can choose how high in the ad listings you want to appear. All else being equal, the more you pay relative to other advertisers, the higher your ad will be.

Popular search terms can have a dozen or more ads listed in order on search results pages, giving the impression that anyone can drive clicks with PPC. But consider this: 85 percent of all PPC clicks are on ads in one of the top three positions. The remaining ads, whether there are five more or 50, share the scraps.

Unless you bid high enough to get into one of the top three spots, you're wasting your time. You're not wasting money, because if nobody clicks you pay nothing, but if you choose to be hidden further down the list, you'll have trouble generating the leads you want to close the sales you need.

Fix No. 2: Choose search terms and manage bids in such a way that you consistently appear in one of the top three spots.

Not making your ad copy specific. Yahoo allows 190 characters (including spaces) in a text ad. Google allows just 70. No pictures, no colors and no company logo are allowed - just a few words.

Many advertisers waste this precious space with vague, meaningless terms (e.g., quality, economical, good service) or general statements that don't clearly explain the uniqueness of their offering. When that occurs, one of two things can happen, both of which are bad.

The first is that searchers don't click on your ad. Again, it costs you nothing but it doesn't help you meet your objectives, either.

The second bad thing is worse, as it costs time and money: The wrong searchers click. In other words, your ad causes clicks, but those who click - thanks to poorly written ad copy - are not good candidates for your product or service. You pay for the clicks, but the leads go nowhere.

Fix No. 3: Be specific and unique in ad copy. If you have patented or otherwise unique features, a particular market or application expertise, unusually friendly return policies or warranties or something else that sets you apart, mention it here.

A searcher goes to Google and inputs the term "red widget." Your ad pops up and the term red widget is in both its headline and ad copy. The searcher clicks on your ad (because you're in one of the top three spots) and arrives at a landing page that is specifically about red widgets.

There's no confusion, no hesitation, no wondering whether this isn't the right place after all. The searcher is systematically taken down a keyword flow path from start to finish.

Web searchers have lots of options and are presented with lots of data. This leads to impatience and a tendency to abandon any search that doesn't quickly and easily lead to a desired result.

Fix No. 4: Ensure landing pages focus on the keywords that bring clickers there in the first place (you may have several landing pages, simply to ensure keyword flow). You'll increase clicks, conversions and ROI.

Not bothering with testing. One thing that makes PPC advertising so compelling, particularly for those with limited ad dollars, is that it is instantly and perfectly testable. Unlike an ad in the newspaper, on the radio, in a trade journal or in any other traditional offline media, PPC dollars can be tracked. Not only can you tell which words were clicked on, you can follow the click all the way through to a completed conversion (newsletter signup, literature request, sale, etc.).

So it's critical to constantly test PPC results, tinkering with or discarding the keywords, ads and landing pages that don't work and making improvements along the way. You will not get everything right from the start. But thanks to the data that PPC advertising generates, you can fine-tune the process and continually improve your ROI.

Fix No. 5: Test, test, test. It's easy to do and, with a bit of focused attention, you can improve results drastically.

PPC has a tremendous amount to offer small and midsize businesses. Keep these five guidelines in mind as you establish your PPC campaigns, and you'll turn clicks into profits in no time.